Commodity Trade Mantra

Posts Tagged ‘Bullish for Gold’

Comex A Zombie Market: Hedge Funds Record Short Paper Gold

You may ask yourself, how do you kill a zombie? As a market for the trading of physical gold and silver, the Comex is already dead. At some point, the entities who have stuck around to try their hand in the rigged paper game will either go broke or simply fade away. At that point, the bullion banks will be left to play only with themselves.

Rate Hike Or No - The Fed Will Not Kill Gold

The Fed either raises rates by 25 basis points in December, or it doesn’t. Both scenarios are actually bullish for gold. Doing nothing is good for gold for obvious reasons. But if they actually do hike, the gold market has already discounted the rate increase, likely factoring in substantially more than 25 basis points.

Gold Price Correlation With Federal Funds Rates Since 1971

Everyone assumes higher interest rates will devastate zero-yielding gold, leaving it far less attractive. This premise led investors to avoid gold like the plague, and speculators to short sell it at wild record extremes. But provocatively, history proves gold price thrives in Fed-rate-hike cycles. Higher rates are actually bullish for gold.

Will There Be a New Gold Rush?

Even though the amount of dollars is going up, eventually debt will be wrung out of the system. This causes deflation, which is very bullish for gold. In deflation, both creditors and debtors are in dire straits. They’re facing enormous pressure. People tend to turn towards stores of value like gold.

follow us

markets snapshot

Market Quotes are powered by India

live commodity prices

Commodities are powered by India

our latest tweets

follow us on facebook